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29 July 2014TrademarksClémence Le Cointe

The powers of customs authorities in Europe

Recital 5 in the preamble to European Council Regulation No 1383/2003 of July 22, 2003, concerning customs action against goods suspected of infringing certain IP rights, and the measures to be taken against goods found to have infringed such rights, stated that “action by the customs authorities should involve, for the period necessary to determine whether suspect goods are indeed counterfeit goods, pirated goods or goods infringing certain intellectual property rights, suspending release for free circulation, export and re-export or … detaining those goods.”

The basic procedure was that if within ten working days of receipt of the notification of suspension of release or of detention, the customs authorities had not been notified that proceedings had been initiated to determine whether an IP right had been infringed or had not received the right holder’s agreement where applicable, release of the goods should be granted or their detention should be ended, as appropriate, subject to completion of all customs formalities.

The new regulation

The new European Regulation No 608/2013, dated June 12, 2013, which entered into force on January 1, 2014, concerning customs enforcement of IP rights and repealing Regulation 1383/2003, clearly marked an increase in the powers of the customs authorities and introduced, among other things, the right of customs authorities to destroy small parcels without having to obtain the consent of the IP right holder every time.

This power is applicable when the owner of the IP rights requests customs intervention and allows the customs administration to proceed to the destruction of small parcels without being asked for authorisation. However, this procedure still requires the consent of the declaring party or the proprietor of the parcel in that case.

Furthermore, a simplified destruction procedure for potentially infringing goods has also been put in place. In the previous text, it was optional; now it is obligatory. It means that there is no need to analyse whether there has been an infringement of an IP right, and goods can be destroyed if the declaring party or the owner of the goods allows it.

"the customs authorities will remain a supporting entity in the fight against counterfeiting and not a fighting entity in their own right."

In these proceedings, it is important to keep the central focus on the IP right owner, which is the one saying whether the goods are infringing its IP rights. The agreement of the declaring party or of the owner of the seized goods still has to be obtained. If the owner of the goods or the declaring party does not provide an answer, the customs administration can destroy the goods on its own initiative.

As confirmation of this development on a national level, and as an example, the French legislator adapted to the new regulation with a law that entered into force on March 11, 2014. The powers of the French customs authorities were clearly extended and aligned with the new regulation.

This development is a response to an escalating need for customs control following the increase in counterfeiting. However, the Court of Justice of the EU (CJEU), through its case law, clearly showed a determination to supervise these increased powers and to establish a framework.

Controlling the powers

In a decision dated April 9, 2014 (C-583/12), the Estonian highest instance referred to the CJEU for a preliminary ruling on a customs matter that gives an interesting practical example. In the case Sintax Trading v Estonian Customs Administration, the court had to decide whether the Estonian authorities were right to waive the goods’ release and to engage on their own initiative the procedure to analyse whether the goods were infringing a registered design, without the initiative of the IP right owner. The court confirmed that only the owner of the infringed design had to engage the proceedings to determine whether the seized goods were an infringement of the designs owned.

The Estonian company Sintax Trading OÜ imported into Estonia bottles of mouthwash supplied by a Ukrainian company. At the time of the importation, another Estonian company, Acerra OÜ, informed the customs administration that these goods infringed its registered design. Following this notification, the customs administration decided to retain the goods to allow a further examination. This further analysis confirmed the similarity between the imported goods and the protected design.

The customs administration therefore requested an opinion from the owner of the design, Acerra OÜ, which confirmed the infringement. The request from Sintax to release the goods was therefore refused.

Sintax entered a proceeding before the court. It was decided by the first instance that the administration should release the goods. Acerra filed an appeal and the appeal court decided that the customs administration could not decide whether the seized goods were infringing or not. After the deadline set to retain the goods had passed, in the absence of any court proceedings having been entered, customs should have released the goods.

A question was then asked by the Estonian Highest Court whether “the proceedings to determine whether an IP right has been infringed” referred to in Article 13(1) of Regulation 1383/2003 could also be conducted within the customs department or whether “the authority competent to decide on the case” dealt with in Chapter III of the regulation must be separate from the customs authority.

In point 25 of his Opinion, Advocate General Cruz Villalón of the CJEU even noted that the measures suspending release or detaining goods suspected of infringing IP rights that might be taken by the customs authorities are temporary in nature. In its decision, the court clearly mentioned that “when they are applied on the initiative of the customs authorities, such measures are intended solely to enable the right holder to lodge an application for action by the customs authorities in accordance with the procedures and under the conditions laid down in Article 5 and following articles of Regulation 1383/2003.”

Second, when customs authorities have adopted measures following such an application, they aim solely to enable the applicant to establish that it has initiated proceedings to determine whether there has been an infringement of an IP right under national law. Therefore, it is clear that the powers given to the customs authorities are intended only to give the IP right owners the possibility and time to take the necessary actions, and do not replace the responsibility of the right owners themselves to undertake the actions to preserve their rights.

The increasing powers of the customs authorities can be observed through the extra autonomy that was gained through the replacement of the EC Regulation. This may lead in future to an intrinsic change in customs administration. However, it has been settled that the customs authorities will remain a supporting entity in the fight against counterfeiting and not a fighting entity in their own right.

The increase in the powers put at the disposal of the customs authorities will most certainly have consequences or an influence on the role played by IP right owners, which might increase as well, as the decision rendered by the CJEU in case C-98/13 Martin Blomqvist v Rolex SA shows. n

Clémence Le Cointe is a French trademark attorney at Dennemeyer & Associates in Munich. She can be contacted at clecointe@dennemeyer-law.com

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